Market Review 

Malaysia: The FBM KLCI (-0.3%) extended its losses on the back of the surge in Covid-19 cases, coupled with the anticipation over more stringent lockdown measures. The lower liners extended their losses, while the Plantation (+0.1%) and Financial Services (+0.02%) sectors outperformed the negative broader market.

Global markets: The US stockmarkets snapped a three-day losing streak as the Dow (+0.6%) recovered all its previous session losses, led by gains in technology stocks following the solid unemployment claims data. European stockmarkets also rebounded, while Asia stockmarkets closed mostly higher.

The Day Ahead

The FBM KLCI extended losses for the second session as persistent fears over stricter lockdown offset the optimism over the ongoing vaccination programme, given the Covid-19 daily confirmed cases continued to stay above the 6,000 level. Mild bargain hunting may emerge, but market sentiment may remain cautious as investors will monitor the decision on a full MCO at National Security Council (NSC) meeting today. Commodities wise, both the CPO and oil prices staged a pullback following the recent rally.

Sector focus: Investors may opt for stocks with high earnings certainty amid the earning season, such as packaging and essential consumer related sector. Besides, bargain hunting may emerge in the technology stocks following overnight gains in Nasdaq.

The FBM KLCI ended in the negative territory on final hour selldown, while the EMA20 continued pointing downwards. Technical indicators remained negative as the MACD Histogram has turned into a red bar, while the RSI was hovering below the 50 level. We expect the key index to trade below the 1,600 psychological level over the near term with support located around 1,555-1,565.

Company Brief

Bursa Malaysia Securities has queried Widetech (Malaysia) Bhd after its share price surged to a multi-year high of RM4.00 yesterday. The regulator issued an unusual market activity (UMA) query after the price surged and it also advised investors to take note of the company’s reply to the UMA when making their investment decision. (The Star)

Econpile Holdings Bhd's subsidiary Econpile (M) Sdn Bhd has received a RM64.4m award for the bored pile works of a mixed development in Raja Chulan, Kuala Lumpur. The job entailed the construction of a secant bored pile wall and foundation bored pile and slab for the development. It is expected to commence in August 2021 for a duration of 16 months. (The Star)

Sime Darby Plantation Bhd’s 1QFY21 net profit rose 20.1% YoY to RM562.0m, due to favourable crude palm oil (CPO) prices increased production and improved downstream performance. Revenue for the quarter increased by 20.7% YoY to RM3.67bn. A special final dividend of 2.13 sen a share was declared. (The Star)

Leong Hup International Bhd’s (LHI) 1QFY21 net profit surged 222.8% YoY to RM70.3m, mainly due to an increase in average selling price and sales volume of broiler chickens in Malaysia, Indonesia and the Philippines as well as increase in average selling price of DOC in those three countries. Revenue for the quarter increased 16.9% YoY to RM1.68bn. An interim dividend of 0.66 sen, payable on 9th July 2021 was declared. (The Star)

Nestlé (M) Bhd has moved its corporate headquarters to 1 Powerhouse, Bandar Utama from Surian Tower in Mutiara Damansara. The move is aligned with the group's ongoing efforts to embrace the future of work through a purposeful workplace design following the Covid-19 pandemic. (The Edge)

Globaltec Formation Bhd has reported that its Australia-listed subsidiary NuEnergy Gas Ltd is expected to obtain approval from the Indonesian government to develop its Tanjung Enim block in South Sumatera. The approval is expected to be granted on 17th June 2021. (The Edge)

Y&G Corp Bhd has been slapped with an unusual market activity query by Bursa Malaysia, after its share price hit limit up again yesterday. In these past few days, Y&G’s share price has climbed 167.9% from 56 sen on last Wednesday. (The Edge)

Freight Management Holdings Bhd’s 3QFY21 net profit soared 199.0% YoY to RM6.1m, mainly due to higher freight rates and an improvement in business activities performance in its Malaysian and overseas operations. Revenue for the quarter climbed 57.6% YoY to RM215.8m. (The Edge)

Hock Seng Lee Bhd’s (HSL) 1QFY21 net profit rose 20.4% YoY to RM9.1m, underpinned mainly by the construction segment. Revenue for the quarter grew 41.9% YoY to RM159.5m. (The Edge) Sunway Construction Group Bhd's (SunCon) 1QFY21 net profit rose 23.8% YoY to RM20.2m, underpinned by higher construction revenue and improved blended margin due to its precast segment. Revenue grew 24.4% YoY to RM455.2m. (The Edge)

KPower Bhd's 3QFY21 net profit surged 530.0% YoY to RM14.2m, partly helped by a significant increase in the group’s construction-related activities. Revenue for the quarter surged 334.5% YoY to RM137.7m. (The Edge)

Sarawak Plantation Bhd’s 1QFY21 net profit surged 308.1% YoY to RM23.8m, on increased operating profit and gain arising from changes in fair value of biological assets of RM12.1m. Revenue for the quarter rose 47.0% YoY to RM145.5m. (The Edge)

Genetec Technology Bhd has secured RM41.2m in new orders from existing customers. RM35.3 m of the orders come from electric vehicle and battery players, and RM5.9m from hard disk drive, electronics and semiconductor players. (The Edge)

AirAsia X Bhd’s (AAX) 5QFY21 net loss stood at RM5.67bn, as revenue shrank to RM38.5m as the majority of its aircraft fleet remained grounded since mid-April last year amid Covid-19, apart from a limited number of cargo and charter flights. There were no comparative figures as the group changed its financial year end to 30th June, from 31st December. (The Edge)

Heineken Malaysia Bhd’s 1QFY21 net profit grew 29.1% YoY to RM73.5m, due to the gradual adaptation by businesses and consumers to the new normal, easing of restrictions in March 2021, and effective execution of various campaigns. Revenue for the quarter rose 6.2% YoY to RM547.7m. (The Edge)

UOA Real Estate Investment Trust's (UOA REIT) 1QFY21 net rental climbed 60.0% YoY to RM22.7m, due to higher gross rental. Revenue for the quarter rose 49.0% YoY to RM29.6m. (The Edge)

Trading of shares in rice and sago sticks manufacturer Eka Noodles Bhd will be suspended from 31st May 2021, after Bursa Malaysia Securities rejected its application for a further extension of time to submit its revised proposed regularisation plan. (The Edge)

Berjaya Sports Toto Bhd’s (BToto) 3QFY21 net profit plunged 61.6% YoY to RM18.7m, dragged by its subsidiary Sports Toto Malaysia Sdn Bhd. Revenue for the quarter fell 15.8% YoY to RM1.12bn. (The Edge)

M3 Technologies (Asia) Bhd has reported that two shareholders have filed a lawsuit to stop the mobile services provider from undertaking employee share option scheme (ESOS) or any other corporate exercise that will serve to dilute their shareholding. The two substantial shareholders are Lim Seng Boon, who stepped down as the group's managing director three months ago, and Voon Sze Lin. (The Edge)

Sarawak Cable Bhd is selling a helicopter for RM35.2m to partially pay off its debts. Following the disposal, the group's borrowings would decline to RM501.1m, from RM534.2m as of 31st December 2019. (The Edge)

Source: Mplus Research - 21 May 2021